WTO decision on US COOL retaliation

10 December 2015

Canada and Mexico have been granted permission by the World Trade Organisation (WTO) to place around US$1 billion (C$1.055bn (Canada) and US$228m (Mexico)) worth of tariffs on US goods per year. This is a retaliatory measure due to the US country of origin labelling (COOL) laws, which have been ruled to discriminate against Canadian and Mexican cattle and hog producers. The value of retaliatory tariffs is less than half of what each country had requested.

The mandatory COOL legislation was repealed by the US House of Representatives in June this year, but has not been repealed by the Senate, so it remains in force. If the Senate does not remove the COOL legislation, the retaliation could come into effect before the end of 2015.There is a strong divide in the US livestock industry, with some groups pushing for the laws to remain in place, while others would prefer to see them wound back before the Canadian and Mexican tariffs come into force.

It is too early to say what impact these tariffs could have on the Australian beef trade – this will be dependent on a number of factors, including (but not limited to): the size of the Canadian and Mexican tariffs on US meat; how much US meat is redirected from Canada and Mexico into the US domestic market; how much is redirected into other export markets; and whether Canadian and Mexican importers may need to look to countries like Australia to fill part of a beef shortfall.